2013 (4) TMI 252 - SC - Companies Law

Supreme Court overturns High Court judgment, remands for fresh consideration.

The Supreme Court allowed the appeals, set aside the High Court's judgment, and remanded the matter for fresh consideration. The High Court was instructed ... Mis-management and oppression U/s 397 & 398 of the Companies Act, 1956 - Preliminary issue of maintainability - the issues of limitation and the locus standi of the appellant - Held that:- It was not permissible for respondent no.1 to agitate the issue with respect to the fact that as the Supreme Court had not set aside the orders dated 16.11.1993 and 18.11.1993, passed by the division bench of the Calcutta High Court, the same remained intact. Such an argument could not have been advanced by respondent no.1 before the division bench, in view of the legal maxim, ‘Actus Curiae Neminem Gravabit i.e. an act of Court shall prejudice no man’. This Court dealt with the said maxim in Jayalakshmi Coelho v. Oswald Joseph Coelho, AIR 2001 SC 1084. In view of the above, we are of considered opinion that the Division Bench erred in holding that after the judgment of this Court dated 26.4.1996, it was permissible for the High Court to hold that the Company Petition under Sections 397/398 of the Act 1956, was non- existence in the eyes of law while placing reliance on the earlier judgments of the Division Bench of the High Court dated 16.11.1993 and 18.11.1993. Thus, the appeals are allowed - The impugned judgment and order of the High Court dated 24.11.2003 is hereby set aside - The matters are remanded to be decided by the High Court of Calcutta afresh giving strict adherence to judgment of this Court dated 26.4.1996 - While deciding the case afresh, the Division Bench shall not take note of the earlier judgments of the High Court dated 16.11.1993 and 18.11.1993. As the matters are pending since long, in the facts and circumstances of the case - We request the Hon’ble High Court to decide the appeals expeditiously preferably within a period of six month from the date of filing of certified copy of this judgment and order before the High Court. Issues Involved:1. Maintainability of the Company Petition under Sections 397 and 398 of the Companies Act, 1956.2. Validity of the consent given by shareholders for filing the Company Petition.3. Effect of withdrawal of appeals by original petitioners on the maintainability of the Company Petition.4. Locus standi of the appellant to challenge the dismissal of the Company Petition.5. Interpretation of the Supreme Court's order dated 26.04.1996.Detailed Analysis:1. Maintainability of the Company Petition under Sections 397 and 398 of the Companies Act, 1956:The right to apply for the winding up of a company is available under Sections 397, 398, and 399 of the Act 1956, provided the applicant holds 10% of the total shareholding. The petition can be filed with the consent of other shareholders to meet this requirement. The application is maintainable if the company's affairs are conducted in a prejudicial or oppressive manner. The Supreme Court in previous cases (e.g., M.S.D.C. Radharamanan v. M.S.D. Chandrasekara Raja) has upheld this principle.2. Validity of the consent given by shareholders for filing the Company Petition:The Court examined whether the petitioners had the requisite 10% shareholding at the time of filing the Company Petition. It was held that the consent of shareholders can be given by a Power of Attorney holder and does not necessarily need to be in writing or annexed with the petition. The validity of the petition must be judged based on the facts at the time of its presentation, as established in Rajahmundry Electric Supply Corporation Ltd. v. The State of Andhra.3. Effect of withdrawal of appeals by original petitioners on the maintainability of the Company Petition:The withdrawal of appeals by the original petitioners (Chatterjee brothers) led to the dismissal of the Company Petition. However, the Supreme Court held that a petition filed in a representative capacity does not become non-existent or non-maintainable due to the withdrawal by original petitioners. The other consenting shareholders are entitled to be transposed as petitioners, and the court can decide the petition on merits even if the original petitioner withdraws.4. Locus standi of the appellant to challenge the dismissal of the Company Petition:The appellant argued that the High Court erred in dismissing the appeals based on locus standi and limitation, contrary to the Supreme Court's order dated 26.04.1996, which allowed the appellant to file independent appeals without these objections. The High Court's reliance on previous orders dismissing the appeals was incorrect as it rendered the Supreme Court's order a nullity.5. Interpretation of the Supreme Court's order dated 26.04.1996:The Supreme Court's order allowed the appellant to file independent appeals against the dismissal of the Company Petition, with no objections on limitation or locus standi. The High Court failed to consider this order and incorrectly relied on its previous judgments. The Supreme Court clarified that the High Court should have adhered to its order and decided the case on merits, ignoring the earlier judgments.Conclusion:The Supreme Court allowed the appeals, set aside the High Court's judgment dated 24.11.2003, and remanded the matter for fresh consideration. The High Court was instructed to decide the appeals expeditiously, adhering to the Supreme Court's order dated 26.04.1996, and disregarding its earlier judgments. The decision emphasized the principles of representative capacity in company petitions and the necessity of adhering to higher court orders.